Need for space drives demand for luxury houses

Last month, Karthikeyan NS (48) bought a four-BHK condominium spread over 5,000 sq ft on the outskirts of Bangalore, against his 2,500 sq ft three-BHK apartment in the city. His reasons behind the switch are compelling — an integrated township with large green spaces, dedicated work areas and extra frills such as club house, gym, yoga studio, pollution and hygiene control thrown in.

“Given that we are going to be working from home for months, buying a larger unit promised work continuity for my wife and me. We now have dedicated work stations, plus space for our two daughters to play, both in the house and within the society, which we were missing in the previous house. Our objective was convenience and better standards,” said the senior-level sales executive with a leading start up.

Kartikeyan’s story sums up the current sentiment in luxury housing (Rs 2-3 crore and above), which, surprisingly, is witnessing an uptick in enquiries and sales in the past three-four months, even as the pandemic rages on. The same segment in the past couple of years has witnessed inventory pile-up and subdued demand.

Luxury real estate is mostly driven by high net worth individuals (HNIs) and ultra HNIs (UHNIs) and depends more on personal wealth than on home loan or stamp duty rates. Analysts say Covid-induced disruptions spurred demand for larger, ready-to-move-in (RTMI) homes with multi-purpose usable areas within an integrated township offering connectivity, state-of-art amenities, exclusivity and large open spaces.

Ashish Puravankara, managing director of Bangalore-based developer Puravankara, said, “It could be that people when undergoing long periods of lockdown appreciate the need for space. Many realised that with modern projects there are various amenities like clubhouses, green spaces, etc. Even in our villa project, in September we have managed twice the number of sales that we did last year.”

He added: “In context of south India, luxury means Rs 85 lakh to Rs 2.5-3 crore. So demand within this range in south and Mumbai (range `2.5-5 crore) will see huge uptake. People realised the need for extra space, modern amenities, etc. Plus there is pent up demand as well.”

In India’s largest luxury housing market, Mumbai, too, business is gradually reviving. Lodha group’s chief sales officer Prashant Bindal said “August has been exceptionally groundbreaking for us, especially in luxury and premium segments. We clocked about Rs 200 crore in premium and luxury segments, which is 33% of overall Rs 617 crore achieved in August. In August 2019, we saw merely Rs 90 crore of business in the premium luxury segment.”

The last two months have been extremely promising for Lodha with about 33% of the total business in September and 40% in October coming from luxury-premium segment. In luxury, consumers are looking for reputed developers who provide high quality homes, an ecosystem, well-managed developments, world-class amenities, etc, he added.

A leading player in the luxury segment in Delhi NCR, DLF is also witnessing “green shoots” of revival. DLF’s senior executive director Aakash Ohri said, “We have seen an uptick in the number of enquiries and sales. With rising HNIs and UHNIs and pent-up demand, despite the pandemic, in the past three months we have witnessed a renewed interest and increase in demand from prospective homebuyers looking for condos,” he added.

Apart from HNIs, non-resident Indians (NRIs) have also spotted their remunerative path to invest in products in this category, Ohri noted.

Another factor aiding demand is RBI rationalising the risk weight for all home loans. Home loan borrowers of high-value loans – Rs 75 lakh and above – will benefit from this move, said Mani Rangarajan, group COO of Elara Technologies.

“In the next couple of years, the luxury market is expected to perform better due to enhanced liquidity and lower interest rates,” he added.